Learn about this win for Australian students and graduates.
In Australia, new legislation has been passed to reduce student loans and lower repayment amounts to ‘make repayments fairer and help students with cost of living relief’.
The reduction came into force from June 2025, before indexation of 3.2% was applied (this is an annual charge applied on the 1st June each year by the Australian Taxation Office). There will be a one-off 20% reduction in HELP (Higher Education Loan Programme) and other student loan programme balances (including VET Student Loans, Australian Apprenticeship Support Loans, Student Start-up Loan and Student Financial Supplement Scheme), alongside a new marginal replacement system to lower repayment amounts.
In addition, there will also be a higher repayment threshold. Now, graduates will need to be earning $67,000 annually before they start repaying their student loan (this was previously a threshold of $54,435). The average student debt in Australia is around $27,600, so a 20% reduction would cut that by around $5,520. 1
Currently, around 70% of people paying a HELP debt are 35 or younger, so the government wants to ease financial pressures for an age group that is in a ‘critical time for saving, considering first home buying and or supporting or starting a family.’ Students and graduates do not need to take any action to receive the 20% reduction; this will be applied retrospectively by the Australian Taxation Office and the indexation charge (mentioned above) will also be adjusted. The government will notify recipients once the reductions have been applied. 2
The Department for Education said that this change will benefit over 3 million Australians and remove more than $16 billion of student loan debt! Additionally, the government recently capped indexation charges, which added another reduction of $3 billion in student debt. 2 There is a calculation tool available online for students to get an estimate of how many Australian dollars their debt will be reduced by with the reductions applied.
Learn more about the debt reduction and access helpful resources and FAQs.
